Wpb Joins Business Program Boston Group Hired To Help Small Firms

Banks can be good citizens by providing small-business loans and still make money, says a Boston economist recently hired to foster new business in West Palm Beach and Fort Lauderdale.

``We`ve asked bankers to make loans that will be repaid. That`s the banker`s greed, and we want a program that plays to that,`` said James M. Howell, chief economist for the Bank of Boston and founder of the Council for Economic Action Inc. in Boston.

The city of West Palm Beach said Tuesday that it has hired the Council for Economic Action to develop a Small Business Development Program. The non- profit group is involved in a similar venture for Fort Lauderdale, which kicked off its program Feb. 6.

Howell said he expects the program to create 40-50 new businesses and help expand 100 to 125 businesses in Palm Beach County. The city is financing the program with a $120,000 federal community development block grant.

Howell`s program, which he originally developed for inner-city Boston, focuses on preparing potential small business owners to obtain capital. At the same time, it encourages local bankers to consider making small business loans, which many are reluctant to do because of high cost and risk.

Howell said entrepreneurs seeking capital must have a business plan before they ever approach a bank for a loan. ``Economic opportunity rewards the prepared individual,`` he said.

The city is asking several area banks to participate in its program. NCNB National Bank, Flagler National Bank and Barnett Bank of Palm Beach County already are involved in the program`s development.

Said Ron Smith, vice president and senior credit officer of NCNB National Bank in West Palm Beach, ``These programs can work if everyone understands the purpose of them: It`s not giving away money but understanding how to get loans.``

Under Howell`s program, potential small-business owners take a course at a local college aimed at developing a business plan and enabling them to seek capital from a bank or other equity sources. In West Palm Beach, Palm Beach Junior College will be teaching the course.

Howell advises that students pay for the course to prepare them for paying their own way in the future. In Boston the short course costs $65, and a full 36-hour course costs $600; revenue is funneled back into the program.

The Boston program`s high cost drew some criticism from those attending West Palm Beach`s presentation Tuesday. Howell said the program serves to weed out those who probably couldn`t make it as a business owner. ``If $600 exhausts all a person`s equity, we`re doing that person a favor keeping him from going into business,`` Howell responded.

Howell said there are ways a city can ease some of the costs of starting a new business. But he says that it`s important the business owner have some of his own money at risk. ``Even if equity financing is available, the person ought to have some capital at risk. The dream has to be paid for at equal sacrifice.``

James M. Polatty, director of planning and community development for West Palm Beach, said the city hired Howell because he has a ``proven program.``

The Council for Economic Action says its Boston program since 1985 has helped start 26 new businesses, 80 percent of which are owned by minorities.